IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND MANAGEMENT RESEARCH (IJSSMR )

E-ISSN 2545-5303
P-ISSN 2695-2203
VOL. 10 NO. 11 2024
DOI: 10.56201/ijssmr.v10.no11.2024.pg.233.243

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Oil Price Fluctuations and Sustainable Development in Nigeria

Ogbokor David

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Abstract

This study examined the effect of oil price fluctuations on sustainable development in Nigeria. Essentially, sustainable development was measured using the United Nations Development Programme (UNDP) Human Development Index (HDI) comprising Nigeria’s average achievements in three basic aspects of human development such as health, education and standard of living. Thus, the objectives are to determine the effects of Brent crude oil price, West Texas Intermediate crude oil price and exchange rate on HDI in Nigeria. Annual time series data on each of the variables were obtained from the UNDP Human Development Report, Central Bank of Nigeria (CBN) Statistical Bulletin and Energy Information Administration (EIA) between 1990 and 2022. This study employed econometric techniques of unit root, cointegration and parsimonious error correction model (ECM), among others for the analysis. The unit root test results showed that all the variables are integrated of order one, I(1) at the 5% significance level. The Johansen cointegration test result established evidence of a long-run relationship between the HDI and the explanatory variables. The parsimonious ECM showed that Brent crude oil price positively and significantly affects HDI. This highlights the fact that export earnings increase as the Brent crude oil price rises, thus creating an opportunity for improving human development through investments in education, health and economic activities. On the contrary, the West Texas Intermediate crude oil price and exchange rate adversely affected the HDI. This suggests that fluctuations in West Texas Intermediate crude oil price and exchange rate are detrimental to human development in Nigeria. The error correction coefficient showed that the model can adjust from the short to the long run at a speed of 37.72%., thus corroborating the evidence of a long-run relationship between HDI and oil price fluctuations. Thus, this study recommends tha

keywords:

Oil prices, sustainable development, Brent crude oil, West Texas Intermediate, HDI

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